If you subscribe to Southwest emails or fly them frequently, you probably received the email that has been the talk of the web for the past day. Southwest sent a blast email yesterday to all members indicating that effective March 31st, 2014, they will increase the redemption rates for “Wanna Get Away” fares from 60 points per dollar to 70 (roughly 17% devaluation).
If you’re not familiar with how Southwest redemptions work, they are a revenue based system, which means that the cost of redemption for a free flight depends on how much the flight costs in dollars (70 points per dollar starting on March 31st, to be exact). So for a fare that is selling for $100 just to use a nice round number, it currently costs 6,000 points to redeem for that free flight. With this new change, it will start costing you $70. So essentially now it will take more points to book a free flight.
Devaluations are not uncommon, and in the miles and points game they are actually expected. That’s why you should always do your best to earn and burn points as quickly as you can. They never hold their value over time.
What this means to us:
If you are planning trips or are thinking of going anywhere, the one thing you can do is try to book as many Southwest flights as possible prior to March 31, 2014. Anything booked after that date will be at the higher rate. With Southwest there is very little risk of booking in advance, as you can redeposit your points without a penalty if you were to cancel or change the flight. You should also re-evaluate whether accumulating points with Southwest as your primary currency is still a good strategy for you or if you should shift some spending to other airlines.
I do like that Southwest didn’t sugarcoat the email, saying that this would allow them to be more competitive or enhance the value you receive, blah blah blah. They merely framed it as “this is the deal” and gave plenty of advance notice so you can plan accordingly. They are still my favorite airline for domestic travel, especially since I double the value of my points with my Companion Pass, so in my particular situation and based on the fact that I live in Texas they are still the best and preferred option for me.